10th March 2023, Skopje – Market offers diverse instruments, whereby opting for the right instrument depends on the costs, i.e. the interest rate thereof. This was the decisive factor when repeating the auction of the 9th Eurobond, so as to avoid costs higher than the initial auction, being cancelled due to technical reasons, Minister of Finance, Fatmir Besimi, said in his guest appearance for “10 Minuti” TV Show on TV 21.
“Citizens have the right to get informed about every single detail. Plenty of discussions and various aspects related thereto resulted from the Eurobond. What is crucial and what every citizen should know is that the interest costs for the Eurobond worth EUR 600 million, at the auction taking place in February, amounted to EUR 37.5 million. At the auction held in March, which was repeated since the initial auction was cancelled due to technical reasons, the interest costs for the Eurobond worth EUR 500 million and the additional EUR 100 million provided via a loan under favourable terms and conditions, remained the same”, Minister Besimi said.
By pointing out that the Eurobond is issued for repaying prior due debts amounting to EUR 600 million, he stressed that the intention was keeping the same amount of costs related to the prior debts, as at the initial auction. In other words, we combined diverse instruments, by issuing Eurobond amounting to EUR 500 million, with the other necessary EUR 100 million being provided via loan under favourable terms and conditions.
In addition, he indicated that a distinction should be made between nominal and real interest rates and that if the inflation rate is taken into account, than real interest rate on borrowing is negative, which is important, since this is sustainable in the long run compared to the projected real economic growth rate.
According to the Minister, although it is not simple to come up with the ideal solution, this was done in the most optimal way amidst turbulent times of crisis. Thereby, he added when stepping in on the international market, the investors’ bidding at the Eurobond is the most important matter, as was actually the case with the latest auction when the bidding amounted to EUR 2 billion, being even higher than the initial auction, thus being clear vote of confidence in and credibility of the country.
Besimi stressed that all the more important is the fact that this borrowing is used for repaying prior debts. Thereby, deficit in the amount EUR 700 million has been projected under the Budget, being intended for capital expenditures, projected in the amount of EUR 800 million, with these funds being provided via loans under favourable terms and conditions, extended by international financial institutions, also supporting the economic policies and measures planned under the Budget.
During his interview, Minister also touched upon the signed Agreement with the American and Turkish Consortium ”Behtel and Enka”, aimed at realizing major infrastructure projects , pertaining to Corridors 8 and 10d. Thereby, he pointed out the significance of the projects, for which EUR 1.3 billion is to be set aside in the next five year, while positive contribution to the GDP growth rate is also anticipated.
He also mentioned the measures the Government undertakes, aimed at reducing the inflation, as well as executing the Budget.